Australian National College Pty Ltd and Australian Skills Quality Authority
[2019] AATA 2221
•3 July 2019
Australian National College Pty Ltd and Australian Skills Quality Authority [2019] AATA 2221 (3 July 2019)
Division:GENERAL DIVISION
File Numbers: 2019/3206 and 2019/3207
Re:Australian National College Pty Ltd
APPLICANT
AndAustralian Skills Quality Authority
RESPONDENT
DECISION
Tribunal:Ms Anna Burke AO, Member
Date of decision: 3 July 2019
Date of written reasons: 26 July 2019
Place:Melbourne
For the reasons given orally at the interlocutory hearing, the Tribunal grants the application for a Stay, with conditions, of the Australian Skills Quality Authority’s decision of 8 May 2019.
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Ms Anna Burke AO, Member
CATCHWORDS
PRACTICE AND PROCEDURE – application to Stay decision of Australian Skills Quality Authority – decision to reject renewal application as a registered training provider – decision to reject renewal application of CRICOS – whether prospects of success – consequences for Applicant – public interest – whether review would be rendered nugatory –– Stay application granted with conditions
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Education Services for Overseas Students Act 2000 (Cth)
National Vocational Education and Training Regulator Act 2011 (Cth)
CASES
BJSB Pty Ltd (t/a The Imperial College of Australia) and Australian Skills Quality Authority, Re [2019] AATA 1053
Metro College of Technology Pty Ltd and Australian Skills Quality Authority, Re [2015] (unreported)Scott and Australian Securities and Investments Commission, Re [2009] AATA 798
SECONDARY MATERIALS
Standards for Registered Training Organisations (RTOs) 2015
REASONS FOR DECISION
Ms Anna Burke AO, Member
26 July 2019
The Australian National College Pty Ltd (ANC) seeks a Stay of a decision made by the Australian Skills Quality Authority (ASQA) on 8 May 2019 to reject the Applicant’s renewal as a Registered Training Organisation (RTO) under provisions of the National Vocational Education and Training Regulator Act 2011 (Cth) (the NVR Act) and to reject the Applicant’s renewal of its Commonwealth registration of institution and courses for overseas students (CRICOS) registration under the Education Services for Overseas Students Act 2000 (the ESOS Act). The relevant decisions were due to take effect on 18 June 2019.
The application was heard via telephone on 17 June and 1 July 2019. ANC was represented by Mr Nick Galatas of GPZ Legal. Mr Damian Cox, Solicitor, appeared for ASQA.
The Tribunal provided an oral decision at the hearing; granting a Stay with conditions on the basis of significant concern for the public interest. Mr Galatas, on behalf of ANC, subsequently requested written reasons for the decision and these are those reasons.
BACKGROUND
ANC is an RTO under the NVR Act. It has been registered as a VET and CRICOS provider since September 2008, providing training in business, marketing communications, early childhood and education, community service, print communication, retail and general English. ANC has a capacity for 704 students; as at 13 June 2019 it had 211 students enrolled, all of whom were overseas fee-for-service students. Mr Gurdeep Singh Dhillon was the CEO/PEO from February 2013 until April 2018 when he left the organisation and Ms Mogana Kownden was appointed as the new CEO/PEO.
On 28 and 29 November 2018, ASQA conducted a renewal audit of ANC and identified non-compliance with the respective Acts.
On 26 February and 1 March 2019, ANC provided ASQA with additional evidence to demonstrate that they had now addressed the issues regarded as non‑compliant in the audit.
On 20 March 2019, ASQA updated the audit report following an analysis of additional evidence supplied by ANC and determined that ANC was critically non-compliant.
On 8 May 2019, ASQA’s Chief Commissioner decided to not renew ANC’s RTO and CRICOS registration as ANC has failed to demonstrate that it provides quality training appropriate to meet Australia’s social and economic needs for a highly educated and skilled population pursuant to the s 2A of the NVR Act.
On 6 June 2019, ANC’s legal representative lodged an application for review and a Stay application against the determination to not renew its registration. It sought a Stay of ASQA’s determination as:
·the applications for review and their outcome will be rendered nugatory because the Applicant’s registration will be cancelled and it will cease to operate;
·the Applicant’s business will be irreparably damaged thereby rendering the outcome of the appeal nugatory;
·the Applicant’s prospects of success are not hopeless or fanciful but at least reasonable and the applications for review raise issues for determination by the Tribunal at final hearing; and
·the prejudice to the Applicant if the decisions are not stayed are greater than any prejudice to the public interest, to the Respondent or to any third party.
LEGISLATIVE FRAMEWORK
The effect of s 41 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) is that unless the Tribunal orders a Stay of the operation of a reviewable decision, which it has the power to do under s 41(2), the mere making of an application for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the reviewable decision; in this case being the rejection of renewal of ANC’s registration under the NVR and ESOS Acts.
Upon request by a party to an application, the Tribunal may order a Stay of the operation of the reviewable decision under s 41(2) of the AAT Act “if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review”. The Tribunal may make orders “staying or otherwise affecting the operation or implementation of the decision… or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review”.
Then President Downes J in Re Scott and Australian Securities and Investments Commission [2009] AATA 798 set out a number of factors to be considered in deciding whether to grant a Stay under s 41(2) of the AAT Act. They include:
·the prospects of success;
·the consequence for the applicant of the refusal of a Stay;
·the public interest;
·the consequences for the respondent in carrying out its functions depending upon whether a Stay is granted or not;
·whether the application for review would be rendered nugatory if a Stay were not granted; and
·other matters that are relevant.
EVIDENCE BEFORE THE TRIBUNAL
The evidence considered by the Tribunal included:
·affidavits of ANC's Chief Executive Officer, Ms Mogana Kownden;
·financial statements and lease agreement for ANC; and
·ASQA’s audit report and submissions.
ASQA’s audit report assessed ANC’s practice against the relevant RTO and ELICOS standards finding, after consideration of additional evidence, that ANC was compliant in 3 practice areas and non-compliant in 5 practice areas. As the report was quite substantial, the Tribunal has selected one area to highlight the concerns raised by ASQA and the response by ANC. The ASQA audit report assessed National Code Standard 8.1 which requires: “The registered provider must monitor overseas students’ course progress and, where applicable, attendance for each course in which the overseas student is enrolled” and found ANC non-compliant. The report found in part:
Evidence of non-compliant monitoring progress practice includes:
·The requirements for satisfactory progress do not align to the requirements of the training product. That is, the point of intervention and issuance of warning letters is not aligned with the duration of the training products on the RTO’s scope of registration. Qualifications are delivered over a 12 month period in total and the RTO’s policy chooses not to intervene and commence the warning process until well after 6 months of the courses has passed. For example but not limited to:
o Students are not receiving 2nd warning letters until a matter of days before the end date of their course (and a short duration before the end of their Confirmation of Enrolment date). The policy in place specifies warning letters are to be issued at the end of the first study period of 6 months and again at 12 months if the student falls below the required 50% pass rate over two study periods. However, courses are a total of 12 months in duration; therefore, the specified timing for intervention to occur is too late.
·The following students showed no evidence of course progress from the specified dates:
o ANC11514: 18 June 2018
o ANC11426: 6 June 2018
o ANC11313: 18 August 2018 and was due to finish the course 11 November 2018
·The following students had their Confirmation of Enrolment extended without evidence to support their reason for non-attendance and/or course progress:
o ANC11485
o ANC1165
o ANC11352.
ANC provided the following response:
The amended VET Monitoring Course Progress Policy and Procedure had been implemented since March 2019.
Intervention strategy of a few students in place and VET course progress is being monitored, Extra classes have been suggested and assisted by the trainer as support.
i.ANC 11447
ii.ANC 11391
iii.ANC 11797
iv.ANC 11741
The student who does not achieve Satisfactory course progress {competency} from all the units/courses enrolled after the first 10 weeks of study will be sent a warning letter.
The new policy states that course progress monitoring and early intervention is done after every 10 weeks of study. Intervention strategies will be implemented should the student fail to meet the course progress requirements after every 10 weeks of studies.
Our VET courses range from 40 to 80 weeks, The new policy will ascertain that the student are monitored after each 10 weeks of studies to to ensure the overseas student is in a position to complete the course within the expected duration specified on the overseas student’s CoE.
However we acknowledge that it is not as clear in the policy. Appropriate amendments will be done.
CONSIDERATION
The prospect of success
As has been observed in several authorities, it is not the role of the Tribunal, in assessing the merits of a Stay application under s 41(2), to conduct a preliminary hearing (or sometimes referred to "a mini trial") of the evidence and issues to be raised subsequently at a final hearing, when evaluating an applicant's prospect of success. The task of the Tribunal in such an application is to consider whether facts and circumstances exist which would provide some basis for success.
Mr Galatas for ANC correctly argued that the fundamental principle applying to this urgent application before the Tribunal was that it is not a mini trial. Accordingly, he argued it was not possible for the Tribunal to determine or to form any meaningful view about the alleged non-compliances which form the issues in dispute, as they can only be determined at the final hearing. Mr Galatas stressed that ANC, at this stage of the proceedings, had demonstrated that it had issues with ASQA’s audit report and further that it has addressed or is addressing the allegations at hand. Therefore, ANC had demonstrated that it had put its “best foot forward” and more importantly was continuing to do so. Thus, their application satisfies the minimum threshold of the criteria required to establish that the application has prospects of success at a final hearing.
Mr Cox for ASQA contended that the application for a stay should not be granted as ANC had not demonstrated that the decision was wrong. Additionally, since being informed on 14 May 2019 that its registration was not going to be renewed, the material supplied by ANC demonstrated that it had not taken any action whatsoever to address the non-compliance. Nor did it ensure that there was compliance across the rest of its scope or explain how it would take steps to ensure non-compliance does not reoccur.
Mr Galatas refuted Mr Cox’s assertion and contended that the response table provided by ANC identifies the actions taken by ANC to address relevant clauses of the RTO standards of the National code which ASQA claims remain outstanding.
The Tribunal acknowledges that in considering whether to grant a stay, it is not appropriate to undertake a full consideration of the merits of the substantive applications. This is particularly so given that there are a number of factual matters in dispute in this case and the evidence before the Tribunal about those matters has not been presented in full and that part of the evidence is, at present, untested.
Nevertheless, the Tribunal must form a view on the prospects of success and ANC’s current performance. The Tribunal, on its precursory review of the issues in contention and submissions made by the parties, is not satisfied ANC is currently compliant with all its registration requirements or has addressed all concerns raised by ASQA in its renewal audit. Given the length of time that ANC has been operating in this sector, this is of considerable concern as it should have its house in order. It may be that by the time of the substantive hearing, ANC can show that all of its practises have been revised and are compliant; and that it has established sufficient internal resources and practices to ensure that it will maintain ongoing compliance with all relevant standards for its RTO and CRICOS registration.
The Tribunal is satisfied on the material before it that ANC's prospects of success are not hopeless or fanciful. However, the Tribunal does not consider that ANC’s prospects of success could be presently characterised as reasonable or good. By the time of the substantive hearing, it is plausible that ANC's evidence may be greatly improved to a point where it could be fairly stated that it has at least reasonable prospects of success. The Tribunal considers that this consideration weighs in favour of granting a stay, but not to the point that the stay should be unconditional.
Review would be rendered nugatory if a Stay were not granted
It is submitted on behalf of ANC that if a Stay is not granted it will contribute to its closure and subsequent collapse, causing irrevocable financial losses and damages to the company and key staff. Additionally, Mr Galatas strenuously argued that a stay with any conditions would be as deleterious and drew the Tribunal’s attention to the recent decision of Senior Member Dr Cremean in the matter of Re BJSB Pty Ltd (t/a The Imperial College of Australia) and Australian Skills Quality Authority [2019] AATA 1053 where the Senior Member found at [15]-[23]:
Although I was pressed by the Respondent’s Counsel very strongly with the public interest argument, I consider that whether that argument is right or not depends largely on whether the decisions under review are the correct or preferable ones or not. It cannot be in the public interest for the Applicant to go out of business, which is the effect of the decisions under review, if those decisions may be set aside upon a hearing as not being the correct or preferable ones on the evidence.
That latter conclusion can only be made, in my view, following a hearing in light of all the evidence presented to the Tribunal. I am unable to form a view that those decisions are or are not the correct or preferable ones until the hearing of the review has been concluded.
I do not consider it is proper for me at this point merely to guess about whether the Applicant will succeed in its review or not. However, I am satisfied that on a stay application it is proper to consider a party’s prospects of success. Doing that very thing, I am satisfied that the Applicant presents an arguable case based on its affidavit materials.
But this is not the place to conduct a hearing before a hearing to decide whether the Respondent’s contentions about the merits of the review are correct or not.
It would be tragic in my view not to grant a stay and then find out, later on, that the decisions under review, upon a hearing of the review applications, are not the correct or preferable ones and should be set aside.
This also raises a further point. The Tribunal has a review function and I consider that function is subverted if a stay is not granted. That is to say, the purpose of conducting a review hearing will be futile if the Applicant cannot carry on business awaiting the outcome of the review. There seems to be no point in conducting the review hearing if the Applicant has gone out of business as a result of the decisions under review not being stayed.
Therefore, in terms of the requirements of section 41(2), I do not see how I can secure the “effectiveness” of the review hearing, or its efficacy, unless a stay is granted.
Moreover, I am quite satisfied on the affidavit evidence of Mr Jaswal that a failure to grant a stay would have very serious consequences indeed, both for the Applicant and its employees in a wide range of ways. Those persons I consider are persons whose interests ‘may be affected by the review’ as section 41(2) stipulates.
In addition, as I have indicated, I am satisfied that there are contestable issues which need to be properly ventilated for determination at a substantive review hearing and not beforehand.
The Tribunal concurs with Senior Member Cremean’s determination that not granting a stay and subsequently finding that the original determination was not correct or preferable would be tragic. Conversely, granting a stay to a decision that is affirmed would also have tragic consequences for those the relevant Acts were created to protect – students and the sector.
Mr Cox for ASQA contended that ANC had considerable financial resources available to it to continue operation if a stay was not granted and that there was no evidence of what the company shareholders were prepared to do to ensure that business stayed viable.
Mr Galatas for ANC argued that ANC could not remain viable if it was not allowed to continue to enrol students and referred the Tribunal to Ms Kownden’s sworn affidavit of 24 June 2019 in which she stated:
As CEO, I am conscious of ANC’s obligation to remain financially viable at all times as required by the RTO Standards.
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The accountant’s letter refers to total equity and explains it. The equity does not permit ANC to continue to operate without enrolments and commencements of new students and to remain financially viable at the same time and able to continue to operate until the final hearing.
The letter referred to by Ms Kownden is that of Mr Manpreet Singh, director SSK Accountants, dated 24 June 2019 and advises that: “The figures clearly state that the financial viability of the company would be of great concern should future enrolment not be allowed”.
The Tribunal is satisfied, based on the evidence before it, that ANC is unlikely to be able to sustain itself financially between now and the final determination of this matter using its current cash reserves if it ceases all operations. For this reason, the Tribunal considers that the applications would be rendered nugatory or pointless, if the stay was not granted. This weighs in factor of granting a stay. However, the Tribunal is not satisfied that ANC will face insolvency if a condition is imposed on the stay prohibiting new enrolments pending final determination of the applications.
The Tribunal considers that this factor weighs in favour of granting the stay given the expected time before these applications can be heard by the Tribunal. This is so in spite of the fact that the Tribunal has requested an early hearing date, being approximately 3 months away, and that the parties have undertaken to prepare this case for hearing on an expedited basis.
Public Interest
Mr Galatas for ANC argued that it was not in the public interest for ANC to have to close, causing irreparable damage to its owners, staff and students. He continued to stress that if no new students could be enrolled this would have a deleterious effect on the institution from which it could not be salvaged. He again referred the Tribunal to Ms Kownden’s sworn affidavits in which she stated:
As at now, we employed [sic] 20 people in full time, part time or casual employment or alternatively, as contractors…
In addition to our presently studying students, we have issued confirmations of enrolment to another 216 students who are due to commence from June 2019 until July 2021…
In my earlier affidavit, I gave evidence that I expected ANC would suffer reputational damage and would start to lose students. This has started to happen. We have received applications for refunds from students, applications to cancel their enrolment and the emails from education agents…
We have 51 enrolled students who are scheduled to commence their qualifications with us on 1 July 2019… If the condition not permitting us to commence new students is not lifted before 1 July 2019, we will not be permitted to commence these students. As a result, we would have to cancel their enrolment and refund the money they have paid to us.
ANC would lose the money they have paid, the money they are expected to pay and also it will need to devote resources to address the needs of these students, including processing their applications for refund and transfer and assisting them as required.
As 51 students are involved, not only will ANC be directly affected as I have explained and 51 students would have to find other providers quickly, but I expect we will suffer significant reputational damage in the market by having to release 51 students immediately and in one go. In addition, the majority of the students are recent arrivals from overseas. They have not previously undertaken a course in Australia with any other provider. They have come to Australia on the basis of confirmation of enrolment issued to them by us. Their visa has been approved on that basis. It will cause them significant disruption, as well as confusion to them and their parents as they are mostly young people and in Australia for the first time, if they are required to change provider.
Students are enrolled on an ongoing, rolling basis throughout the year. Students finish their qualifications at different times. We replenish enrolments as students complete their course and anticipate when that will happen. It takes time to secure students in the pipeline.
It is clear that we have not enrolled anywhere near as many students as our capacity allows. That is because we take great care in the students we enrol and we do not wish to simply maximise the number of enrolments which we are allowed which may increase our profits but will imperil our ability to deliver quality training.
Mr Cox strenuously argued that the Tribunal should be mindful at all times of the objectives of the NVR Act, as set out in s 2A, which are:
(a)to provide for national consistency in the regulation of vocational education and training (VET); and
(b)to regulate VET using:
(i)a standards-based quality framework; and
(ii)risk assessments, where appropriate; and
(c)to protect and enhance:
(i)quality, flexibility and innovation in VET; and
(ii)Australia's reputation for VET nationally and internationally; and
(d)to provide a regulatory framework that encourages and promotes a VET system that is appropriate to meet Australia's social and economic needs for a highly educated and skilled population; and
(e)to protect students undertaking, or proposing to undertake, Australian VET by ensuring the provision of quality VET; and
(f)to facilitate access to accurate information relating to the quality of VET.
The Tribunal was mindful of the determination of then Senior Member McCabe in Metro College of Technology Pty Ltd and Australian Skills Quality Authority in which he observed:
But there is also the question of the public interest. The regulatory system was devised to protect consumers of these courses, and to protect the good name of Australian educational institutions overseas. Many students travel long distances from overseas [...] The regulatory regime assumes there is a public interest in ensuring these programs are properly run according to recognized standards. Failures to adhere to standards – particularly where those failures suggest systemic problems, poor judgment or an unwillingness to comply with the law – must be taken very seriously.
On balance, I am not satisfied it is desirable to order a Stay under s 41(2). I acknowledge that the applicant may well not survive until the hearing, which may be yet some time away. That would frustrate the review. I also accept the applicant will be unable to recover its losses and reputational damage even if it is successful. I also acknowledge the hardship for teachers and staff and the inconvenience of students. I am conscious the applicant’s case is not devoid of merit. But I am troubled by the important questions of public interest that have been raised. If the decisions are affirmed, the students who are still enrolled, or who may enrol [sic], will rightly feel their qualifications have been undermined. That may undermine confidence in the regulatory system and the integrity of the Australian vocational education and training sector.
The Tribunal also notes the legislated functions of ASQA are set out in s 157 of the NVR Act. The ASQA is empowered as the relevant regulator to undertake enforcement action and to make decisions intended to promote and protect the students and the general reputation of the Australian vocational education and training sector both nationally and internationally, and to ensure that registered RTOs and CRICOS providers are operating in compliance with their statutory obligations.
The Tribunal is satisfied that there is a risk that the objectives of the legislative regime may be undermined, including a risk of damage to the reputation of the Australian vocational education and training sector and a risk of undermining and devaluing the qualifications issued by ANC, if ANC is unable to address the specific and systematic areas of non-compliance as alleged by ASQA.
In these circumstances, the Tribunal considers that the risk of an adverse impact on the public interest identified weighs against the granting of a stay. However, the Tribunal also considers that these risks could be effectively reduced by imposing conditions upon ANC both not to enrol new students until the final determination of the application and to comply with its current registration requirements.
CONCLUSION
In its determination the Tribunal considers that the public interest assumes primacy. This is consistent with the objects of the NVR Act and the ESOS Act. It is also consistent with the unanswered findings of the audit which raise significant questions about the quality and integrity of the training, education and assessment that is offered to the students who have paid tuition fees and enrolled for courses with the ANC.
There is also the consideration of the fact that international students are paying significant sums of money for courses that may not have been properly taught. The consumer protection considerations are critical. There is also Australia’s reputation in the international marketplace for higher and vocational education which must be considered as a matter of public interest. If the areas of non-compliance are not addressed, there is a potential for that reputation to be damaged.
The Tribunal acknowledges that ANC may suffer consequences as a result of the conditions placed on the stay order but these are outweighed by the significant risk that students would suffer if they were permitted to commence with ANC whilst the outcome of the renewal application is unknown.
DECISION
The Tribunal grants the application for a Stay, with conditions, of the Australian Skills Quality Authority’s decision dated 8 May 2019.
I certify that the preceding thirty eight (38) paragraphs are a true copy of the written reasons for the decision of Ms Anna Burke AO, Member
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Associate
Dated: 26 July 2019
Date of hearing: 17 June & 1 July 2019 Solicitor for the Applicant: Mr Nick Galatas
GPZ legalSolicitor for the Respondent: Mr Damien Cox
Australian Skills Quality Authority
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